Search This Blog

Thursday, November 24, 2016

Trumponomics and side effects

International economists are scared stupid over Trump.  In some ways correctly, in some they are blind to the Obamabull we have had the last 8 years which has killed growth.  That’s what they have at home--low growth, much social welfare.

            Yet they rightfully raise many pitfalls.  Trump’s plan is lower taxes, cut regulations, draw corporate money home by less business taxes, protect US manufacturing while reworking trade to our advantage.  Much of this will work, though the protectionism is controversial and if overdone, will cripple US trade.  My hope is that he’ll leave the trade stuff until later.  US growth is suffering from Obama’s over-regulation.  Everything from haze( humidity and dust) in the atmosphere being declared a pollutant, to puddles being called navigable waters, to Obamacare is killing business and raising the prices of what we buy.  Highest corporate taxes in the world and being virtually the only country which tries to reach out and grab taxes of Americans overseas, makes companies flee to other shores and try to re-incorporate in foreign countries.  High personal taxes sap small biz growth which is the main creator of new jobs. 

All this is Reaganesque, and exactly what the internationals fear.  For a strong US economy means growth means higher interest rates.  This draws foreign capital, especially when somebody overseas fears their home politics or markets.  Foreigners with dollar denominated loans get killed when US interest rises and the dollar goes up to boot.  In 1992 this caused a debt crisis among foreign governments who had borrowed in the US to support their deficit spending habits.  It badly hurt Slovenia and places as close as Mexico. The ensuing recession (a lot of it was foreigners defaulting to US banks) spread but was mild in USA.  Bush and Congress intervened to help Latin America.  If this kind of thing develops again, look for foreign governments to invoke capital controls.  That will make our borrowing costs go higher still. Then if interest doubles or triples, federal debt service on all that $20T Obama ran up, will crowd out other spending in the budget. 

Secondly, a high dollar with good US growth means imports get cheaper and our trade deficit gets larger.  But Trump can’t just slap on tariffs the way we could do in the olden days.  Supply chains are sprawled out all over the globe.  An American made car has 75-90% of its parts made elsewhere. Protectionist tariffs mean killed growth in most industries. A battle over exchange rates with China could prove very harmful to the US.  All this is to say the growth might be shorted out, economic instability in some sector (something gets overbought, then crashes) arises and we get recession.

Thirdly, the low tax, low regs boost will likely result in some really wealthy people who play the situation well.  This inequality will just stoke the heck out of the demagoging Democrats.  The key to overcoming this toxic politics is to have more people finding more jobs and better pay overall, new folks re-entering the job market, etc.  That’s what Reagan did in the 80’s and it made the Dems look like crybabies balling about how everybody was making money but them. 

Still, none of this will be easy, especially when you think about how slow the recovery will be.  Businesses won’t instantly close foreign plants and move back to USA.  Businesses will still worry and hedge their bets about future Obamas coming to re-regulate.  Banks will still be nervous about their loans. And Trump wants a big spending binge by Congress for infrastructure and stimulus.  At best, it will stimulate.  At worst, government gives pork that does little to spur growth to friends and supporters. And then protectionism may cause all sorts of problems.  If I were Trump I would go easy on the protectionism and stimulus.

The internationals are worried because they invest all over the world and our spark of growth could light bonfires all over the globe. British (and other) bankers will be holding lots of foreign debt that may default over a high dollar.  If US manufacturing grows and plants in Nigeria or Egypt close, look for revolts, civil wars and jihadism to spring up all over.  Then what?  Let Russia and China take advantage and gobble up territory? Let an ISIS-like movement go wild? We’ll gladly take the pill, but watch out for side effects.

Sunday, November 20, 2016

Paris burning, Trump in church

Remember Paris Hilton?  She was 'so in' as long as she was drunk and out of her wits, doing homemade porn and partying without end.  Then they took the heiress to jail and she announced that she had cried all night and read the Bible and was going to change her ways.  The media dropped her like a hot potato, never to be heard from again.  Overnight, Paris burned. And now it turns out she has voted for Trump!  “Could it be—“ I’m voicing this like they always ask on those cable TV specials about space aliens: Could it be that they influenced Einstein????—“that Paris grew up and realized what she had to lose?” Like a fortune?  Like her soul? Like her sanity?

Lewinsky too.  She voted Trump.  Kanye West woulda if he hadda.  Alas poor Hillary, I knew thee well. She underperformed among women, Afro-Americans, and young people, but she did really well among pollsters.  Well, yeah, and she had trouble with Wikileaks, but doctors say this is common if you are 69 years old.  Trump won. The Cubs won.  Hell hasn’t frozen over but it’s 36 degrees.  Obama chastised Hillary saying she didn’t go to enough fish fries and county fairs.  He did.  Wow! I agree for once with Obama! But then Miss Shirley asked rhetorically, “Did Hillary have the stamina?”  Excellent question. 

Take consolation, Democrats.  This is the first time a billionaire has been asked to move into federal project housing formerly inhabited by a black family at 1600 Pennsylvania Avenue.  And Hillary is going to build a big, beautiful wall between her Foundation and the FBI.  Mexico has already capitulated.  They read that stuff about her and called up Washington and agreed to build a wall and pay for it no matter who won.

So now we have moved on.  “If you like your legacy, Barack, you can keep it.” The Clinton Family Foundation has changed its name to Clinton Legal Defense Fund.  And some young kids in many cities, who didn’t bother to vote, are trying to protest and change the election results.  Good luck with that. “Hey, let’s burn down some cities run by liberals for years.  That’ll teach people not to vote for Trump!”  And Trump is picking Cabinet appointees which Chuckie Schumer is going to oppose and filibuster.  Um, Chuck, you guys changed the Senate rules, remember?  There can’t be any filibusters of appointees.  Straight up or down vote and 51 wins it.  Guess who has 51 now?  Don’t you remember you and that Harry Reid changed this? 

I’ll say this, with so many things coming back in style these days, I can’t wait for intelligence and morality.  Plus I heard the two scariest Halloween costumes this year, an IRS agent and the kid who showed up at Clinton’s headquarters dressed as a lie detector. Trump and Pence went to church today together. When people in my Sunday School class today started saying things about voting for Trump, and everyone seemed to have voted for him, Pastor asked if he was a perfect person then.  Everyone laughed heartily.  So if Trump went to church, he is in the right place, just like all the rest of us.  Maybe we got the boat upright this time.

Friday, November 11, 2016

Electoral College

They used to teach this in school but evidently don’t anymore because so many think we’d be better with Popular Vote determining Presidential winners.  The Founders had to have all the states behind their effort to write a constitution.  You can’t very well form a country out of 7 of the 13 colonies.  In this urgency they wrote a constitution that both recognizes popular vote for Representatives and state vote for Senators.  And they decided against popular vote for Presidents.  Instead they constructed an Electoral College as a special convention numbering as the sum of Reps and Senators from each state.  State popular vote gets the electors.  Why this method?

Simple.  They didn’t want the country ruled from one corner or one area of large population.  The President has to be President of all the people.  We can’t have a situation where the guy elected decides the people in the rest of the nation are nobodies, just flyover country—you guys in Dakota can vote if you wish but your vote doesn’t much count.  If USA were a popular vote Presidency, there is no reason to campaign in Utah or Kentucky.  Instead, all campaigns would be for the 15 large metro areas that professional sports calls “Large Markets”.  Win a big majority in those and you win it all.  If there were two candidates with close popular vote, like Trump and Clinton, they wanted the person whose colors covered the map most.  Take a look at this last election.  Though Hillary may have won the popular vote by 2,000,000, she has no states between the coasts except for NM, CO, MN, and IL.  Such a regional President would lack the ability to unite the country, the Founders reasoned. You have to win a majority of the Electoral College votes.

That majority of the College also means the political parties must be widely appealing.  In Europe they have parties of strict doctrine—socialists, communists, greens, farmers, labor—and nobody wins more than 27% of the vote among 8 parties running. But in USA, in order to rule, you must have a party that appeals broadly to many people from wide areas of the country.  That causes constant turmoil in our parties with conservatives or moderates or progressives vying for accendancy, but  we work it out.  In the rest of the world, parties are strict in belief and don’t try many new ideas. Parties are like tribes of fierce loyalty.  No independent voters, like in USA.

The Electors are not dullards. They are real people.  In case the President-Elect dies or turns into something really evil, they are free to vote their conscience. There has to be a transition time between the Presidencies if the new guy is to get organized.  If not, then we have to have a Parliamentary system like United Kingdom of Great Britain with cabinets and programs already in place. That sudden change has not made for peaceful transitions in many European countries.  Americans like to think of ourselves as one people, not warring factions vying to get the upper hand.

European democracies have also taught another lesson on why we are wise to have Electors.  If popular vote rules and nobody gets a majority—such as this last election, what do you do?  Do you allow the 35% guy to take office?  The other 65% will have no respect and the nation will effectively be leaderless like Poland in the face of Nazis attack.  Or do you make the further demand that any government formed must have the majority of votes?  In that case Trump or Hillary would be in negotiations to get Gary Johnson to form a coalition government—thus push vote total over 50%.  Coalition governments have a history of mundane gridlock to disastrous in Europe.  When Hindenburg needed a partner in 1933 he chose Hitler who had 14% of the vote.  Hindenburg died, Hitler diabolically burned down the Reichstag (legislature building) with all the opposition party members in attendance, decried the tragedy but emplaced his Nazis in power and declared martial law.  Coalition governments are how you get a 14% guy in power by trick or brute force.  

So add it up.  Presidents with wide appeal, big-tent parties, campaigns spread out over the land, transition time to govern, national unity and strong leaders/no coalition governments. This is why America is exceptional—an exception to the rule in governments—and darn well worth it.

Saturday, November 5, 2016

Solutions for Education

What follows are some thoughts on education and why it continues to yield lesser results by Charles Murray, sociologist and expert on IQ and testing.

            If you test people for different abilities, you will find one has musical talent; another, athletic; another, interpersonal skills.  And none of these are related.  But there are 3 common abilities --verbal, mathematical and spatial reasoning skills—that correlate.  Doing well in one implies highly likely to be above average in the others. Together, we could call these the Academic Abilities.  And this is the source of IQ measurements.  Students with high IQs succeed in school.  This talent is fairly fixed among individuals. 

            Almost everyone knows what it is like to be poor at some aptitude.  You were the last kid chosen in sports.  You are tone deaf and can’t see the poetry in music.  And kids who aren’t chosen by the teacher for an answer, soon realize their lack of academic talent.  It’s demoralizing because “smarts” has a lot to do with not only status but credentials for success later in life.

            If you think schools just do a bad job when students don’t score well, talk to teachers who have struggled with lower academic ability students.  Progress is slow. Concepts won’t be remembered the next day. Now nobody would insist that we can make a klutz into a super athlete, or a shy kid an extrovert. Only in our public schools do we romantically insist that we can make low academic ability students into geniuses.  It simply isn’t true. And this is the problem with No Child Left Behind.

            We should define what is meant by verbal/math/spatial reasoning.  Here’s a problem from an 8th grade achievement test.  “If a company had 90 workers last year and this year they have 10% more, how many workers does the company have?” If you say 99 congratulations. 2/3 of 8th graders can’t answer this.  Note this tests reasoning ingenuity.  It has been discovered that 90% of students can identify last year’s 90 workers; a large portion can calculate 10% (= 9).  But the final step of adding the two together is what stumps so many.  Now we could “teach the test” by teaching problems of this type, but there are thousands of other reasoning questions, so the overall score is little changed. Bottom line, a large majority of students can memorize a large amount of material. But ingenuity is rarer.

What then separates schools with good scores vs. those with poor ones?  Excellent question.  It was first investigated in the Coleman Report of the 1950s, to investigate differences in academic achievements of rich kids and poor. Everybody in Congress, who sanctioned the study, had theories.  Credentials of teachers, curriculum, facilities, money spent per student or per teacher—none were found to correlat with achievement.  Family background was far and away the most important factor in school success. Subsequent studies of adoptions proved that IQ is partly due to environment.  If you live in a upper middle class neighborhood, have parents greatly interested in your education and spend time with your learning, you’ll have higher academic achievement. Subsequently attempts to increase ability in students from poor backgrounds in programs such as Head Start have been spectacularly unsuccessful.  (Spending per student in Head Start is 3 times that of an elementary common ed, yet 2 years hence, has no measureable improvement in student scores! It’s little more than day-care for the poor.) Yet we also know there are truly bad public schools with low achievement.  These have violent classrooms, nonexistent standards, incompetent teachers and competent ones who have given up. 

We could start forming conclusions here, but let’s talk college first.  Ever since the 1920s colleges have said that to comfortably do the coursework, you need an IQ of 115 (upper 16%, SAT 1180).  110 can struggle and get a degree.  Even 105 can achieve it by targeting easy courses and majors.  About 50% of high school graduates try college.  With diluted courses, this now yields 35% graduation rate. (It was 25% in the 60s) But that means that 2/3 of students join the workforce soon after high school.  Here’s the weird thing.  High School counselors promote college to 90% of students.  Meanwhile the liberal arts education of colleges—teaching a wide body of general learning--has atrophied.  Most public schools no longer teach the lesser version of this “core knowledge” of our culture.  Why teach this?  You need a core knowledge of things like Huck Finn, Wall Street, smoke-filled room politics, Minutemen, Mount Everest and Mecca, to be able to function as a knowledgeable citizen.  This is core knowledge of our culture which was taught prior to the 1980s. Public schools avoid much of this because it has controversy.

Now let’s talk education solutions based on these findings.  First, nearly all students have aptitude at memorization especially in lower grades. Public schools need to return to teaching core knowledge.  Add ethics to this and demonstrate it by providing an environment that is safe, orderly and respectful.  Everyone is entitled to a place where they can learn all they dare to learn and be respected.  If you’re not a Mensa it doesn’t mean that you can’t become a truly good person.  Teaching the forgotten half how to make a living is also in order.  “If you like to operate machinery, do you realize you can make a lot more being a crane operator than a pizza delivery man? Show up every day, work hard, get along with everyone.” Career tech has been an unvarnished success.  It should be further supported.  Sending the message to young people that they should go to college no matter what (Ahem, politicians and guidance counselors) is a bad message.   On the other hand, with gifted students we should encourage them to go as far and fast as possible, letting them find limits in ability. Helicopter parenting and self-esteem teaching (possessing a big opinion of oneself) techniques are ruining students.   Studies show that kids avoid doing anything of risk where they might crash and burn when they get constant accolades.  Even the best need to crash and burn a few times (learn limits) to instill humility.  Leaders, geniuses who aren’t humble, who don’t sympathize with ordinary folks, are tyrants in behavior.  Another area of lack in public education is verbal rigor.  USA’s verbal reasoning skills have been on a downward trend because we have come to accept just about any form of verbal expression.

Finally, expand choice. When people talk about “common sense” they mean a practical wisdom (born from cultural knowledge) that applies logic in an appropriate manner—rightly assessing the consequences of a course of action.  This is what comprises the success of private schools, largely through the template of the paragraph above.  They don’t make IQs go from 100 to 140.  They make more functional citizens and impart Christian faith.  They teach history, which is the way we develop vicarious experience. They teach core knowledge, recognizing that certain issues are so fundamental to the human condition that people must think about them. 

Personal note: I think Murray has come pretty close to the solutions.  I had the privilege of attending a parochial high school that was like the Harvard of high schools.  University physics major was fun and breezy after St. John’s Academy. They performed, on Turbo, the things Murray advises for the gifted half of students. My wife taught first grade at a local parochial school.  She had problem students she took under wing after school.  Big strong carpenters and small engine repairmen still happily holler greetings at her at Walmart to this day. I remember them when they were 3 feet tall.  This is how people should turn out.

None of this is to say we shouldn't pay teachers fairly or support school building projects.  But the real keys are letting teachers be free to teach, good class environments, and having parents who take an interest in the child's education.